To The Moon

According to a report, Yu Ziling, Head of Greater China Fund Business and Executive Director at Allianz Investment, stated in a note that despite inflation running above target and various headwinds persisting, the global economy overall remains on a steady growth trajectory, with the US economy accelerating, Europe outperforming expectations, and China's economy expected to rebound in the fourth quarter. She forecasts that the Federal Reserve, the European Central Bank, and the Bank of Japan will each raise interest rates by another 0.25% before the end of the year.

Yu Ziling flagged multiple risks: the policy stance of the incoming Fed Chair Warsh remains to be seen, and any hesitation in combating inflation could trigger market suspicion; combined with rising de-dollarization sentiment and the approaching US midterm elections, the dollar's outlook warrants cautious assessment; Middle East tensions, energy prices, the labor market, and AI investment returns are also key risk variables. Overall, after a brief mid-year slowdown, the global economy is expected to return to a stronger growth trajectory by year-end.

On equity allocation, she is bullish on Asian emerging markets, with stock preference ranked in order of emerging markets, Japan, the US, and Europe. Expanding AI capital expenditure is driving stronger corporate earnings, with investment opportunities extending from GPUs to advanced materials and power systems; Asia's hardware supply chain and China's mature supply chain are poised to benefit. In terms of thematic directions, she favors robotics, biotechnology, and gold mining; in a rate-hiking environment, value stocks with ample cash flow and reasonable valuations offer allocation value and can hedge against concentration risk in AI themes.

On bonds, she holds a neutral-to-cautious view on developed market government bonds. Elevated core inflation across multiple countries and rising fiscal pressures support rate hike expectations, while US Treasury yields have risen sharply but adjusted in an orderly manner. She currently prioritizes high-rated investment-grade bonds, and certain AI large cloud service providers' bonds are gradually showing investment value after credit spreads widened. Additionally, fiscal risks and concerns over central bank independence continue to support gold demand, and she maintains a bullish outlook on gold; supply tightness in certain commodities and disruptions to refining facilities may further push up energy and commodity prices.

Looking ahead, global economic growth momentum is improving, but inflation and policy risks have yet to subside. She advises investors to broaden their asset allocation, seizing growth opportunities while relying on diversified positioning to mitigate inflation and policy risks.